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France Appeal Court Annuls Arbitral Award

France Appeal Court annuls an arbitral award for lack of jurisdiction in the case of the Sultanate of Sulu versus Malaysia.

The Paris Court of Appeal has stayed the enforcement of the final verdict in Heirs of the Sultan of Sulu versus Malaysia.

The Court held that the award of damages presented a risk of prejudice to territorial sovereignty, warranting a stay. This is based on the restitution value of the disputed territory.

The decision stated again that serious prejudice stay applications are not only limited to factors such as economic consequences of enforcement. Rather, it is also based on the ground without the merit of the annulment application.

Malaysia had asked the Paris Court of Appeal to annul the final award and to stay enforcement pending the annulment proceedings. Malaysia argued for a stay on the count of three grounds:

  • The Court should consider Malaysia’s economic landscape in light of the sum of the award. (An amount three times greater than Malaysia’s healthcare budget.) This would also consider the difficulties Malaysia would face in defending against enforcement in other parts of the world.
  • The serious procedural errors that had impacted the final award.
  • That the enforcement would infringe on its territorial sovereignty (which would include sovereignty over natural resources).

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